News Summary

  • Kroger executives said during the company's second-quarter fiscal 2025 earnings call on Thursday that it will leverage AI to drive modernization, deploying use cases to improve operational efficiency, enhance customer experience, and boost sales growth.
  • Chairman and interim CEO Ron Sargent said Thursday, "Accelerating AI efforts is a natural step for Kroger, given our long history of leadership in data and machine learning. After implementing AI across different parts of the organization, we have seen more competitive pricing, shrink improvement, and faster fulfillment results."
  • Cost optimization and operational efficiency are top priorities for the grocer as it works to move forward from the failed merger with Albertsons. Second-quarter same-store sales excluding fuel grew 3.4%, marking the sixth consecutive quarter of growth for the metric. The company also raised its same-store sales growth outlook for fiscal 2025.

Deep Dive

The grocer, like other retailers, is increasing investment in emerging technologies to mitigate economic headwinds and strengthen its competitive edge. In April, Albertsons executives said the company was strengthening its data capabilities to drive AI applications. Walmart and Instacart are also working to expand their AI capabilities.

Kroger views its "roughly two decades" of loyalty program data, its "deep bench of data science capabilities," and its 84.51° division as the foundation of its AI efforts, Executive Vice President and CFO David Kennerley said on Thursday's call.

Despite the focus on modernization, Kroger has cut staff in related departments. In August, employees in Kroger's technology and digital division were affected. The company also reduced staff at its retail analytics subsidiary 84.51° in March. A spokesperson told CFO Dive's sister publication Grocery Dive that the layoffs were to "focus on key priorities that drive our market strategy."

Going forward, Kroger plans to review "all aspects" of its business to improve efficiency, including a site-by-site analysis of its automated fulfillment network, Sargent said on the latest earnings call.

"We expect to share an update on the strategic review in the third quarter," Sargent said. "We believe the results of our work will lead to stronger e-commerce capabilities and a clear path to profitability."